This ppt talks about the various concepts taught at undergraduate level in Operations Management. Often students find operations management tough but this ppt gives a jist of the concepts. It is a request from people to take this ppt as a reference only.

1. PRODUCTIONS AND
OPERATIONS
MANAGEMENT
MAYANK GUPTA 2019PBA9213
SRISHTI KHANOR 2019PBA9204

2. AUTOMOBILE SECTOR

3. • India became the fourth largest auto market in 2018 with sales increasing
8.3 per cent year-on-year to 3.99 million units. It was the seventh largest
manufacturer of commercial vehicles in 2018.
• The Two Wheelers segment dominates the market in terms of volume
owing to a growing middle class and a young population. Moreover, the
growing interest of the companies in exploring the rural markets further
aided the growth of the sector.
• India is also a prominent auto exporter and has strong export growth
expectations for the near future. Automobile exports grew 14.50 per cent
during FY19. It is expected to grow at a CAGR of 3.05 per cent during
2016-2026. In addition, several initiatives by the Government of India
and the major automobile players in the Indian market are expected to
make India a leader in the two-wheeler and four-wheeler market in the
world by 2025.

4. Market Size
• Overall domestic automobiles sales increased at 6.71 per cent CAGR
between FY13-19 with 26.27 million vehicles getting sold in FY19. Domestic
automobile production increased at 6.96 per cent CAGR between FY13-19
with 30.92 million vehicles manufactured in the country in FY19.
• In FY19, year-on-year growth in domestic sales among all the categories
was recorded in commercial vehicles at 17.55 per cent followed by 10.27
per cent year-on-year growth in the sales of three-wheelers.
• Premium motorbike sales in India crossed one million units in FY18. During
January-September 2018, BMW registered a growth of 11 per cent year-
on-year in its sales in India at 7,915 units. Sales of electric two-wheelers
are estimated to have crossed 55,000 vehicles in 2017-18.

5. THE CONCERN
• According to a report of AUGUST 2019;
In July, the sale of vehicle across categories in the country slumped 18.71% to about 18.25 lakh units, down from about
22.45 lakh units, a year ago in the same month. This has been the steepest fall in nearly 19 years. This data, by the
Society of Indian Automobile Manufacturers (SIAM), gives out wholesale figures — i.e. the number of vehicles
dispatched to dealers by vehicle manufacturers.
The passenger vehicle segment, which comprises cars, utility vehicles and vans, has been one of the worst performing
segments, registering its highest drop in sales since December 2000: almost 31%, to a little over two lakh units from
nearly 2.91 lakh units in July 2018. This was also the ninth straight drop in monthly passenger vehicle sales. In fact,
barring a low single digit uptick in October 2018, segment sales have been falling for the past year.
• Not just the downfall in the sales figures another report also stated that; In August, the apex auto industry body,
Society of Indian Automobile Manufacturers' (SIAM) revealed that around 2.30 lakh auto sector jobs have been lost.
This includes a job loss of around 1 lakh temporary workers in the country's auto component.

6. QUICK FACTS OF AUTO SECTOR
According to report from ‘the Quint’; Domestic sales of passenger vehicles tumbled 51 percent year-on-year to 143,014 units in
March 2020 and this is according to data released by the Society of Indian Automobile Manufacturers. While car sales fell 52.12
percent over the last year to 85,229 units last month, shipments of utility vehicles declined 44.67 percent to 51,569 units.
Monthly factory-gate sales of commercial vehicles dropped the most across categories — 88.05 percent year-on-year to 13,027
units.
A brief overview of the situation around March 2020 related to the different segments of the Automobile Industry is given below:
• Scooter sales fell 32.09 percent over last year to 263,181 units.
• Motorcycle sales declined 41.89 percent year-on-year to 570.860 units.
• Total two-wheeler sales fell 39.83 percent year-on-year to 866,849 units.
• Three-wheeler sales tumbled 58.34 percent to 27,608 units. India’s passenger vehicle sales in 2019-20 fell 17.82 percent over
last year—also the worst ever—to 21,548,494 units.

7. REASONS FOR SLOWDOWN
Discussing further into the reasons already stated for the slowdown and starting from the NBFCs as the reason behind the slowdown.
• Non-banking financial companies (NBFCs) finance most vehicle purchases, particularly in rural India. Dealers depend on NBFCs to fund
their wholesale purchasing of vehicles from OEMs. The recent solvency issues surrounding India’s NBFCs led to cautious lending that has
adversely affected automotive sales in 2019 and shows no signs of abating. OEMs and dealers have approached India’s Finance Industry
Development Council, seeking government intervention to improve the financial health of leading NBFCs.
• Also the purchases made by the buyers of two & three wheelers were affected due to changes in the interest rates on loans for even short
term. The owners of these segment of the automobile industry are with disposable incomes; NBFCs are a support for them to buy their
sources of income.
• According to industry experts, the financial problems that had built up because of the credit crunch in non-banking financial companies
(NBFC), coupled with the slowdown in the national road construction program and delay in assigning new infrastructure projects by the
government, have dented the sales volume of construction equipment by over 25 per cent in the first half of FY'20. The decline in
infrastructure-related work has cast its shadow on the construction equipment (CE) sector, which is in for a hard landing in FY 2019-20.

8. REASONS FOR SLOWDOWN
The next reason being GST implementation for somewhat slowdown in the Automobile segment.
• Although the implementation did not bring any major changes in the working of the commercial vehicles and tractors but it has significantly brought some changes in the taxation
of mini-bus. This would ultimately decrease the demand of minibuses. Not just the commercial vehicles the non-commercial vehicles were also affected by the GST
implementation. The segment affected under the non-commercial vehicles are the luxury cars as well as the hybrid cars. Thus, decreasing the demands of these two variety of
cars.
The other reasons for the slowdown are discussed below:
The introduction of BS-VI norms in the vehicles have also largely affected the automobile sector.
• The foremost impact being the decrease in the demand thus decreasing the consumption of raw materials or the inventory of raw materials. Not just the inventory of
commercial vehicles but also od the non-commercial vehicles had increased.
• The implementation of BS-VI norms will cause a cost jump of about Rs 15,000-25,000 of petrol models and Rs 50,000-70,000 of diesel cars, which is expected to further impact
demand. This will eventually cause a downfall in the sales.
• With the changes in the norms many companies had started the process of restructuring and thus had began the process of laying off people. Not just this with new equipment
for implementing such a norm a new technologies might even be introduced. This eventually increased the percentage of unemployed individuals.
The next reason is the Revised Axle norms and due to these norms the ability of carrying of a commercial vehicle has increased considerably and so the demand of the commercial
vehicles have declined as higher loads are easily transported

9. SCOPE OF OPERATIONS MANAGEMENT IN
AUTOMOBILE SECTOR
• 1. Selection of Plant Location
• 2. Plant layout facility
• 3. Designing the production system
• 4. Production planning and control
• 5. Inventory Control
• 6. Quality Control
• 7. Finding the appropriate work study
• 8. Maintenance and Replacement
• 9. Production control

10. 1.) Selection of Plant Location
In recent years, news of US-china trade war, Brexit issue and also latest Covid-19, has
open up new doors of investment in Indian economy. India can reap this opportunity by
promoting more FDI’s in the automobile sector. With new players willing to invest the
automobile sector will definitely grow.
Plant location decisions are strategic, long term and non repetitive in nature. The
selection of plant is one of the challenging tasks faced by new companies. Location
decisions are affected by internal and external factors. So, a production Head should
carefully take a decision based on an analysis of certain number of factors like:
(i)Availability of Raw Materials
(ii)Proximity to Market
(iii)Infrastructural Facilities
(iv)Government Policy

11. • Availability of Manpower
• Local Laws, Regulations and Taxes
• Ecological and Environmental Factors
• Incentives, Land Costs, Subsidies for Backward Areas
• Climatic Conditions
• Political Conditions
• Municipal and Public Utility Services
• Initial Start and Goodwill
Weightage in terms of % given by
an entrepreneur while selecting a
location for setting up its
industries.

12. • Models available for evaluation of locations
1) Factor Rating Method
2) Point Rating Method
3) Locational Break even Analysis
4) Qualitative factor Analysis
5) Centre of Gravity Method

13. Locational Break Even Analysis Centre of Gravity Method

14. 2) Plant Layout
• A plant layout refers to an optimum arrangement of man, machine,
equipment, material, etc. It is the overall arrangement of the production
process, store room, tool room, material handling equipment, racks, sub
stores, employee services and all other services required for facilitating the
production in factory.

15. • Principles of Plant Layout
(i) Principle of Minimum Movement
(ii) Principle of Space Utilization
(iii) Principle of Flexibility:
(iv) Principle of Interdependence:
(v) Principle of Overall Integration:
(vi) Principle of Safety
(vii)Principle of Smooth Flow
(viii)Principle of Economy
(ix)Principle of Supervision
(x) Principle of Satisfaction

16. Process layout Product layout
Fixed position layout
TYPESOFLAYOUTFORMATS
Combined Layout

17. 3) Choosing the appropriate Production System
Whenever a new firm wishes to invest in automobile production, it has to take into account
a number of factors like choice of customers, cost of raw materials, quality metrics, and lead
time. It has been observed that Japanese firms are very particular in maintaining standards
in production activities. They ensure to chose such type of production system that offers
low cost products and maximum output in minimum time.’
• The techniques and procedures used in the production system are :
1. Forecasting
2. Inventory and quality control
3. Product design and analysis, work study
4. Production control techniques includes Aggregate Planning, Master production
Schedule, MRP, Capacity planning, Line balancing, job shop scheduling,
5. Location and layout decisions

18. Jidoka is a way of spotting problems and taking prompt
action to correct faults at any stage in the production
process. Machinery will automatically detect an issue and
safely stop so that an inspection and any necessary
adjustments can be made. Information is shared with
others on the “andon” display board and operators can
continue working on other machines. In this way the system
helps prevent problems from happening again while
maintaining quality and high productivity.
Just-in-time means making only what is needed, when it is
needed, at every stage of production. That means there is
no waste, consistent quality and an even production flow. It
requires the production line to be stocked with all the right
parts, in the right sequence at the moment production
begins. As parts are used up, new stock is delivered at the
right time, in the right quantity so there is no interruption
or slow-down in the production process.
The kanban system is central to the just-in-time process,
providing an automatic, real-time method to replenish parts
at the line side and keep minimal stock.
A production system based on the philosophy of
achieving the complete elimination of all waste in
pursuit of the most efficient methods.

19. ILLUSTRATION OF TOYOTA PRODUCTION SYSTEM

20. Process design and Selection
If an automobile firms wants to capture the existing market it will have to not
only re design it’s products but also improvise it’s services. Now firms need to
calibrate their processes as per new pollution norms and BS Standards
announced by the govt.
Factors influencing process design are :
1. Capital intensity
2. Vertical integration: control over the supply of inputs and outputs
3. Flexibility in terms of product variety and product volume
4. Quality level and degree of customer contact.

22. 4)Production Planning and Control
Production planning in an industry, required precise decisions to made in order to determine
the exact amount of product that will be produced to fulfil the customers demand.
Demand forecasting is one of the most important factor in production planning process that
able to generate precise production decision. The automotive industry like car manufacturer,
always need an accurate demand forecast serve the uncertain demand of their products,
especially the service parts product, that in fact always has uncertainty in it’s demand and
frequently causing the manufacturer company lose their profit due to the backorder and
overstock occurrence.
Several quantitative forecasting method is used to overcome this problem, one of them is
devoted for fluctuate or uncertain demand which is single exponential smoothing.

23. FORECASTING DONE BY AN AUTOMOBILE COMPANY

24. QUALITY MANAGEMENT
There is an old saying, often heard in business circles that “One is reminded of quality
long after price is forgotten.” To gain back market share the firm need to focus on its
product and service quality.
Importance of Quality Control
1. Customers satisfaction
2. Reduction in cost of production
3. Reduction in scrap
4. Feasibility of using Spare Parts
5. Goodwill creation
6. Increase in Profit
7. High quality reflects small number of defects.

25. Techniques of Quality control
A quality circle or quality control circle is a group of
workers who do the same or similar work, who meet
regularly to identify, analyze and solve work-related
problems. It consists of minimum three and
maximum twelve members in number.
Total quality management (TQM) is the continual
process of detecting and reducing or eliminating errors
in manufacturing, streamlining supply chain
management, improving the customer experience, and
ensuring that employees are up to speed with training.

26. Design Quality Zero defects

27. Mahindra Claims
New XUV500 Has
Zero Defects

30. Inventory Management
Inventory refers to the ‘materials in stock’. In automobile firms inventory
includes all components of tool, fibre sheets of bumpers, nuts, etc. A firm
should maintain a sufficient quantity of inventory so as to continue production
in cases of uncertainties. It is often seen that firms often face shortage of
inventory which ultimately increases lead time. Objectives of inventory
management are:
1. to ensure continuous supply of raw materials so that production is not halted
2. to minimize carry cost of inventory
3. to maintain an optimum level of investment in inventory
4. to reduce the impact of loss due to spoilage, theft, wastage, obsolescence.
5. to minimize inventory ordering costs (disc. is offered when quantities are
ordered in bulk).

31. TECHNIQUES OF INVENTORY CONTROL
1. EOQ MODEL : The economic order quantity (EOQ) is the order
quantity that minimizes total holding and ordering costs for the
year. Even if all the assumptions don’t hold exactly, the EOQ gives us
a good indication of whether or not current order quantities are
reasonable. Each firm should use this technique.

32. 2. ABC Analysis
A.B.C. (Always Better Control) analysis is a popular method for
inventory optimization in supply chain. Under this method, the
inventory is classified in three categories according to their monetary
value and accordingly, the manager designs the inventory management
policies for the store. So, the manufacturer can classify the required
raw material into categories which will ultimately reduce costs
associated with maintaining appropriate inventory level.

33. 3. Just-in-Time (JIT)
• Just-in-time manufacturing, also known as just-in-time production or the
Toyota Production System, is a methodology aimed primarily at reducing
times within the production system as well as response times from suppliers
and to customers.
• This technique is adopted by Maruti Udyog Ltd. which makes timely
restructuring of its plant so that all ancillary industries and suplliers of
inventory operate in the vicinity of the main plant to avoid problems of
transportation.
• Alternate names of this model : ZIP’S(ZERO INVENTORY PRODUCTION
SYSTEM), MAN( MATERIAL AS NEEDED), NOT(NICK OF TIME), ZIN(ZERO
INVENTORIES)
• Concept originated from the Motomachi plant of Toyota

34. Importance of POM in Automobile sector
1. High productivity
• It has been recognized that high productivity in automobile sector is one
of the factor in growth and is the backbone of a nation’s economic
progress. Japan’s economic prosperity and a greater standard of living of
Japanese is due to high productivity of its automobile sector.
• Toyota and NISSAN are perfect examples. They have achieved high
productivity through controlling the machine and manpower idle time,
reducing wastage and minimizing re-work rate and many other factors.

35. 2. High Quality
The need for quality is felt more in our country than anywhere. Although,
Maruti ensures high quality of its products but with the passage of time it is
also deteoriating due to use of sub standardized raw materials to reduce
the gross weight its vehicles and cut the costs in every possible manner.
It should realize the competition from foreign brands, who use the
principle of “higher quality” to fight the competition. POM is responsible to
produced better quality spare parts, and also ensures that parts are
produced as per specifications like what size, colour, dimension, weight and
other characteristics.

36. 3)Reduction of wastages
Waste here refers to waste of all kinds of resources, but especially the
materials which are in a significant portion. Some waste is inevitable like
wastage of electricity in any conversion process of inputs to outputs. In a
plant, a manager first recognizes the stages at which waste is generated,
after recognizing the stages, waste reduction programme is
implemented. Eg; Toyota implements lean manufacturing system which
aims at eliminating 8 types of wastes .

37. 4) Shorter Manufacturing Lead Time
By reducing the manufacturing lead time, production manager can
deliver the goods in time . Toyota has significantly cut down its lead time
from 77 days to 12-16 days. It has adopted principles like Kanban, JIT,
Lean manufacturing, TQM which ultimately reduces the machine set up
time, makes raw materials available in time in sufficient quality of right
quality, reducing rejection rate, by updating processes and continuously
following the principle of Continuous Improvement (CI).

38. The following advantages can be attributed to this shortening of the production lead
time:
• Toyota can achieve a job-order oriented production that requires only a short
period to deliver a particular car to the customer.
• The company can adapt very quickly to changes in demand in the middle of the
month, so the inventory of finished products maintained by Toyota's sales division
can be minimized.
• Work-in-process inventory can be significantly decreased by minimizing unbalanced
production timing among the various processes and also by reducing the lot size.
• When a model change is introduced, the amount of "dead" stock on hand is
minimal.

39. 5) Plant Utilities
Plant utilities refers to services such as lighting, ventilation, air
conditioning, sanitation, and noise control etc. All these need due
consideration from production/operations management. Production
manager has to ensure that proper plant utilities are available in the
factory or not.

40. 6) Safety and Health
Thousands of employees throughout the world lose their fingers, eyes,
limbs, even their lives, every day. Safety, therefore assumes greater
importance in industrial concerns. Safety refers to the protection of
workers from danger of industrial accidents. The protection of heath
workers is a legal requirement too.

41. 7) Better Customer Service
Quick response to complaints of customers, free replacement, during guarantee period, repair and
maintenance facility, etc. are some of the factors which automobile giants like Maruti, ford, and
Toyota excel at.
They also provide Quality assurance of their spare parts and other components etc. In other words,
these big brands provide world class quality products and after sales service which makes them
leaders in their segment.

42. 8) Use of latest Technology
Selection and acquisition of product technology is a significant part of
production and operation management. To fight todays competition,
automobile giants are importing technology from abroad . The operations
manager has the complex task of not only selecting but also acquire
suitable production technology like use of robotics arm, CNC machines,
CAD System, CAM etc. Automation is largely used in automobile plants.

43. References
http://ficci.in/SPdocument/23161/Sector_Report-Automobile_%20Sept%202019.pdf
https://www.thehindu.com/business/Industry/why-is-the-auto-industry-facing-trouble/article29121023.ece
https://auto.economictimes.indiatimes.com/autologue/impact-of-bharat-stage-vi-norms-on-indian-auto-
auto-component-industry/1543
https://auto.economictimes.indiatimes.com/news/industry/no-growth-momentum-before-early-
2021/72331846
https://www.counterpointresearch.com/india-automotive-industry-struggling-in-2020/
https://www.thehindubusinessline.com/companies/firmly-in-the-grip-of-a-slowdown/article30396906.ece